| Mon 27 Feb 2006, 12:21 | | Bidvest Group Limited - Results for the half-year |
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Bidvest Group Limited - Results for the half-year ended December 31 2005
Bidvest Group Limited
Registration Number 1946/021180/06
ISIN ZAE000050449
Share Code BVT URL www.bidvest.com
Results for the half-year ended December 31 2005
Creating value and building strength from diversity
Revenue R38,2bn +21,6%
Trading income R1,7bn +18,7%
Headline earnings R1,1bn +20,4%
Headline earnings per share 368,6c +21,8%
Distributions per share* 162,0c +21,1%
CONSOLIDATED STATEMENTS OF INCOME
Half-year ended Year ended
December 31 June 30
2005 2004 2005
Restated Percentage Restated
R000"s Unaudited Unaudited change Unaudited
Revenue 38 240 127 31 447 147 21,6 62 811 776
Cost of revenue (30 879 816) (25 346 836) (49 957 282)
Gross income 7 360 311 6 100 311 20,7 12 854 494
Operating expenses (5 668 823) (4 675 300) (9 801 481)
Sales and distribution
costs (3 271 066) (2 716 282) (5 877 351)
Administration expenses (1 526 729) (1 351 546) (2 994 130)
Other net costs (871 028) (607 472) (930 000)
Trading income 1 691 488 1 425 011 18,7 3 053 013
Impairment of goodwill - - (10 292)
Net capital profits
(losses) 24 197 (2 157) (19 463)
Net operating income
before finance charges 1 715 685 1 422 854 20,6 3 023 258
Net finance charges (164 412) (131 058) (285 105)
Finance income 24 336 19 399 42 291
Finance charges (188 748) (150 457) (327 396)
Share of retained income
of associates 21 861 6 767 31 941
Income before taxation 1 573 134 1 298 563 21,1 2 770 094
Taxation (420 640) (379 582) (797 755)
Net income for the
period 1 152 494 918 981 25,4 1 972 339
Attributable to:
Shareholders of the
Company 1 123 290 915 532 22,7 1 961 231
Outside shareholders 29 204 3 449 11 108
1 152 494 918 981 25,4 1 972 339
Number of shares in
issue (weighted 000) 299 595 302 991 302 700
Basic earnings per share
(cents) 374,9 302,2 24,1 647,9
Headline earnings per
share (cents) 368,6 302,7 21,8 656,4
Diluted basic earnings
per share (cents) 356,1 292,8 21,6 626,7
Diluted headline earnings
per share (cents) 350,0 293,4 19,3 634,9
Distributions per share
(cents)* 162,0 133,8 21,1 306,0
*Includes distribution
from share premium
HEADLINE EARNINGS
The following adjustments
to income attributable to
shareholders were taken
into account in the
calculation of headline
earnings:
Income attributable to
shareholders of the
Company 1 123 290 915 532 1 961 231
Net impairment of
goodwill - - 10 292
Net loss (surplus) on
disposal and
discontinuance
of businesses (27 952) 1 528 6 594
Loss (surplus) on
disposal and
discontinuance
of businesses (32 927) 2 021 6 053
Tax charge (relief) 4 975 (493) 1 822
Outside shareholders"
interest - - (1 281)
Net loss on disposal of
assets 7 280 111 7 762
Loss on disposal of
assets 8 730 136 13 410
Tax relief (1 450) (276) (5 627)
Outside shareholders"
interest - 251 (21)
Share of capital items
in associates 1 552 - 1 108
Headline earnings 1 104 170 917 171 20,4 1 986 987
Rand/Sterling exchange
rates
Opening rate 11,957 11,285 11,285
Closing rate 11,012 10,870 11,957
Average rate 11,560 11,433 11,532
SEGMENTAL ANALYSIS
Half-year ended Year ended
December 31 June 30
2005 2004 2005
Restated Percentage Restated
R000"s Unaudited Unaudited change Unaudited
Revenue
Services 10 160 630 8 959 691 13,4 18 166 619
Bidfreight 8 328 272 7 229 849 15,2 14 583 212
Bidfreight southern
Africa 7 687 248 6 582 951 16,8 13 268 320
Bidcorp plc 641 024 646 898 (0,9) 1 314 892
Bidserv 1 464 407 1 392 075 5,2 2 890 769
Renfin 367 951 337 767 8,9 692 638
Foodservice Products 15 593 646 11 933 279 30,7 23 782 200
Bidvest Europe 10 365 954 7 475 304 38,7 14 836 523
Bidvest Australasia 3 387 328 2 797 511 21,1 5 691 085
Caterplus 1 260 510 1 104 060 14,2 2 188 544
Combined Foods 579 854 556 404 4,2 1 066 048
Commercial Products 4 663 003 4 128 467 12,9 8 282 407
Office Products 1 832 385 1 671 117 9,7 3 387 385
Bid Paper Plus 1 067 756 968 010 10,3 1 901 636
Bid Industrial Products 1 762 862 1 489 340 18,4 2 993 386
Automotive Products
McCarthy 8 315 108 6 933 450 19,9 13 628 958
Corporate Services 198 346 135 024 46,9 331 845
Bidvest Network
Solutions 20 337 27 112 (25,0) 52 598
mymarket.com 7 132 4 650 53,4 10 860
Namsov fishing 170 877 103 262 65,5 268 387
Inter-Group eliminations (690 606) (642 764) (1 380 253)
38 240 127 31 447 147 21,6 62 811 776
Trading income
Services 485 098 421 223 15,2 883 569
Bidfreight 265 863 226 578 17,3 493 739
Bidfreight southern
Africa 260 233 220 991 17,8 476 811
Bidcorp plc 5 630 5 587 0,8 16 928
Bidserv 144 329 129 732 11,3 283 872
Renfin 74 906 64 913 15,4 105 958
Foodservice Products 570 865 494 487 15,4 1 015 033
Bidvest Europe 286 298 238 760 19,9 532 753
Bidvest Australasia 108 777 85 175 27,7 163 844
Caterplus 105 093 100 012 5,1 186 142
Combined Foods 70 697 70 540 0,2 132 294
Commercial Products 315 922 279 340 13,1 645 926
Office Products 115 875 107 622 7,7 251 175
Bid Paper Plus 79 847 76 585 4,3 159 220
Bid Industrial Products 120 200 95 133 26,3 235 531
Automotive Products
McCarthy 290 172 225 592 28,6 474 672
Corporate Services 56 218 32 632 72,3 90 339
Bidvest Network
Solutions 583 (3 772) - (6 035)
mymarket.com (820) (1 495) 45,2 (2 794)
Namsov fishing 42 264 (4 160) - 12 589
Corporate costs net of
investment income (12 296) 18 275 - 37 530
Bidprop 26 487 23 784 11,4 49 049
Amortisation of tradenames
and trademarks (26 787) (28 263) (56 526)
1 691 488 1 425 011 18,7 3 053 013
CONSOLIDATED CASH FLOW STATEMENTS
Half-year ended Year ended
December 31 June 30
2005 2004 2005
Restated Restated
R000"s Unaudited Unaudited Unaudited
Cash flow from operating
activities (202 448) (400 681) 2 172 651
Operating income 1 715 685 1 422 854 3 023 258
Depreciation and other non-cash
items 450 428 356 410 769 937
Changes in working capital (1 229 752) (1 190 885) 196 314
Cash generated by operations 936 361 588 379 3 989 509
Net finance expenses paid (124 651) (94 577) (210 428)
Taxation paid (491 854) (473 664) (742 364)
Dividends paid and distribution
of share premium by Company (509 890) (410 283) (846 754)
Dividends paid by subsidiaries (12 414) (10 536) (17 312)
Cash effects of investment
activities (1 889 099) (1 375 626) (2 052 310)
Net additions to property,
plant and equipment (755 640) (583 935) (1 199 503)
Net additions to intangible
assets (34 462) (1 615) (17 348)
Net acquisition of subsidiaries,
businesses, associates and
investments (1 098 997) (790 076) (835 459)
Cash effects of financing
activities 1 118 885 (18 054) (769 821)
Proceeds from shares issued 72 702 95 309 177 061
Purchase of treasury shares - - (497 896)
Net borrowings raised (repaid) 1 046 183 (113 363) (448 986)
Net increase (decrease) in cash
and cash equivalents (972 662) (1 794 361) (649 480)
Net cash and cash equivalents at
the beginning of the year 1 497 683 2 100 982 2 100 982
Currency adjustments (70 258) (10 927) 46 181
Net cash and cash equivalents at
the end of the period 454 763 295 694 1 497 683
Net cash equivalents are made up
as follows:
Cash on hand and in the bank 1 915 326 1 358 619 1 707 932
Bank overdrafts shown as current
portion of interest-bearing debt (1 460 563) (1 062 925) (210 249)
454 763 295 694 1 497 683
CONSOLIDATED BALANCE SHEETS
December 31 June 30
2005 2004 2005
Restated Restated
R000"s Unaudited Unaudited Unaudited
ASSETS
Non-current assets 9 235 611 7 372 073 8 388 160
Property, plant and equipment 4 843 288 3 881 157 4 267 825
Intangible assets 2 943 713 2 404 819 2 851 945
Deferred tax 294 687 228 908 221 523
Interest in associates 560 576 143 042 493 684
Investments and advances 530 522 686 075 511 983
Banking and other advances 62 825 28 072 41 200
Current assets 15 175 806 11 598 668 12 745 655
Inventories 5 233 842 4 284 799 4 308 478
Short term portion of banking
and other advances 74 796 96 494 105 979
Accounts receivable 7 590 972 5 858 756 6 623 266
Liquid funds 1 915 326 1 358 619 1 707 932
Non-current assets held for
resale 360 870 - -
Total assets 24 411 417 18 970 741 21 133 815
EQUITY AND LIABILITIES
Total equity 7 867 039 6 861 992 7 642 424
Non-current liabilities 2 928 014 1 862 477 1 841 589
Deferred taxation 56 023 95 329 87 401
Life assurance fund 33 372 14 579 21 410
Long term portion of borrowings 2 637 579 1 533 206 1 513 871
Post-retirement obligations 201 040 219 363 218 752
Long-term portion of banking
liabilities - - 155
Current liabilities 13 616 364 10 246 272 11 649 802
Accounts payable 9 604 416 6 911 995 8 967 468
Provisions 1 203 162 703 912 956 825
Vendors for acquisition 2 383 393 -
Taxation 373 019 324 431 448 242
Short term portion of banking
liabilities 124 137 111 439 94 468
Short term portion of borrowings 2 240 271 2 194 102 1 182 799
Non-current liabilities held
for resale 68 974 - -
Total equity and liabilities 24 411 417 18 970 741 21 133 815
Number of shares in issue 301 364 304 729 299 421
Net tangible asset value per
share (cents) 1 573 1 409 1 542
STATEMENTS OF CHANGES IN EQUITY
Half-year ended Year ended
December 31 June 30
2005 2004 2005
Restated Restated
R000"s Unaudited Unaudited Unaudited
Interest of shareholders at
the company
Issued share capital 15 068 15 237 14 971
- balance at the beginning of
the period 14 971 15 108 15 108
- in terms of the share
incentive scheme 97 129 240
- repurchase of shares by
subsidiary - - (377)
Share premium arising on shares
issued 2 112 306 3 401 939 2 549 591
- balance at the beginning of
the period 2 549 591 3 511 901 3 511 901
- in terms of the share
incentive scheme 72 736 95 262 177 349
- refund of share premium to
shareholders (509 890) (205 142) (641 612)
- repurchase of shares by
subsidiary - - (497 519)
- share issue costs (131) (82) (528)
Foreign currency translation
reserve (28 608) (63 357) 466 019
- balance at the beginning of
the period 466 019 (223 918) (223 918)
- IFRS adjustment - 207 850 203 106
- arising during the period (494 627) (47 289) 486 831
Statutory contingency reserve 6 846 4 240 6 039
- balance at the beginning of
the period 6 039 4 240 4 240
- transfer from retained income 807 - 1 799
Equity-settled share-based
payment reserve 82 126 37 139 57 828
- balance at the beginning of
the period 57 828 - -
- IFRS adjustment - 20 201 20 201
- arising during the period 24 298 16 938 37 627
Movement in retained income 5 496 901 3 304 506 4 374 418
- balance at the beginning of
the period 4 374 418 2 691 082 2 691 082
- IFRS adjustment - (96 966) (92 222)
- net attributable income 1 123 290 915 532 1 961 231
- dividends and capitalisation
issues - (205 142) (205 142)
- net credit goodwill arising in
prior years transferred to
retained income - - 21 268
- transfer to statutory
contingency reserve (807) - (1 799)
7 684 639 6 699 704 7 468 866
Outside shareholders" interest
- balance at the beginning of
the period 173 558 370 006 370 006
- IFRS adjustment - (571) (571)
- net attributable income 29 204 3 449 11 108
- dividends and capitalisation
issues (12 414) (10 536) (17 312)
- share of movement in foreign
currency translation reserve (89) (2 422) 1 762
- share of movement in equity-
settled share-based payment
reserve 138 17 41
- changes in shareholding and
advance from outside
shareholders (7 997) (197 655) (191 476)
182 400 162 288 173 558
Total equity 7 867 039 6 861 992 7 642 424
BASIS OF PRESENTATION AND CHANGE IN ACCOUNTING POLICIES
The Group results for the six months ended December 31 2005 have been prepared
in accordance with International Financial Reporting Standards (IFRS) expected
to be applicable at June 30 2006. As a result of ongoing review and possible
amendments by interpretive guidance from the International Accounting Standards
Board and International Financial Reporting Interpretations Committee, which may
differ from IFRS finally in effect at June 30 2006. The financial statements for
the year ending June 30 2006 will be the Group"s first annual financial
statements prepared under IFRS.
Comparative information presented with these results has been restated to comply
with IFRS. The results for the year ended June 30 2005 have been restated as
unaudited, as the IFRS adjustments have not been audited by the external
auditors.
The Group"s transition date to IFRS is July 1 2004 and the Group has taken
advantage of the following optional exemptions from full retrospective
application at this date:
- Not to restate business combinations which took place prior to transition
date, other than to the extent that there were identifiable intangible assets at
the time of acquisition that were previously written off to retained income.
- To include goodwill on the basis of deemed cost, being cost less accumulated
amortisation, with negative goodwill being written off to retained income. These
adjustments were made in the Group"s financial statements for the year ended
June 30 2005.
- The transfer to retained income of the accumulated foreign currency
translation reserves at transition date.
- To only account for the cost of options to acquire shares in the Company,
granted subsequent to November 7 2002 which had not vested by January 1 2005.
The transition to IFRS has resulted in the following principal changes to the
Group"s accounting policies:
- Property, plant and equipment - where components of property, plant and
equipment have significantly different useful lives, they are accounted for as
separate assets. The useful lives and residual values of all assets are assessed
annually. In addition, the Group now provides for the estimated cost of
dismantling and removing items and restoring the site on which they are located,
as part of the cost of the asset. Changes in the measurement of these
liabilities resulting from changes in timing or outflow of resources required to
settle the obligations are recognised in the statements of income as a finance
charge.
- Intangible assets - acquired computer software, previously reflected in
property, plant and equipment as office furniture and equipment, has now been
reclassified as an intangible asset. The useful life of computer software, both
acquired and self-developed, is assessed annually. Patents, trademarks and
tradenames acquired as a result of business combinations prior to June 30 2000
and written off against retained income, have been reinstated with effect from
the date of the business combination. These patents trademarks and tradenames
have been amortised in accordance with the Group"s existing accounting policies.
- Share-based payments - options to acquire shares in the Company granted to
shareholders and staff, have been expensed against income over the vesting
period at fair value, with a corresponding increase in equity. The fair value of
the options are measured using the binomial method taking into account the terms
and conditions upon which the options were granted.
- Leases - certain leases, which were previously considered to be operating
leases, have been reclassified as finance leases.
- Revenue recognition - fees charged for the origination of loans were
previously recognised immediately in income, and are now deferred over the
anticipated period in which services will be provided.
- Insurance - reinsurance assets previously offset against the related insurance
liabilities have been reclassified as assets.
In addition, the Group revised its accounting treatment of operating leases at
June 30 2005 in accordance with the guidelines issued by The South African
Institute of Chartered Accountants whereby leases, which have fixed determinable
escalations, are charged to income on a straight-line basis, as compared to
being expensed when incurred. The results for the six months ended December 31
2004 have also been restated to account for this change.
Reconciliation between IFRS and previous South African Generally Accepted
Accounting Practice
The impact of the adoption of IFRS on the equity and the profit attributable to
shareholders is detailed in the tables below.
RECONCILIATION OF EQUITY
December 31 June 30
2004 2005
Restated Restated
R000"s Unaudited Unaudited
As previously reported 6 820 990 7 564 401
Adjustment for change in accounting
policy in respect of straight-lining
of leases (64 535) -
In terms of previous accounting policies 6 756 455 7 564 401
Restatement for
Property, plant and equipment (14 483) (23 824)
Intangible assets 139 418 123 816
Leases (10 254) (10 530)
Revenue recognition (9 144) (11 439)
As reported under IFRS 6 861 992 7 642 424
RECONCILIATION OF EARNINGS
Half-year ended Year ended
December 31 June 30
2005 2004 2005
Restated Percentage Restated
R000"s Unaudited Unaudited change Unaudited
Income attributable
to shareholders as
reported under IFRS 1 123 290 915 532 1 961 231
Adjustments to income
attributable to
shareholders for IFRS 49 250 45 294 92 962
Property, plant and
equipment 4 480 8 805 17 678
Intangible assets 18 304 17 227 32 829
Share-based payments 24 160 16 920 37 580
Leases (637) 322 560
Revenue recognition 2 943 2 020 4 315
Adjustment for change
in accounting policy
in respect of
straight-lining
of leases 7 120# 6 348
Income attributable to
shareholders in
accordance with
previous accounting
policies 1 179 660 967 174 22,0 2 054 193
Adjustments to income
attributable to
shareholders for the
calculation of
headline earnings as
previously reported (19 120) 963 24 167
Headline earnings in
accordance with
previous accounting
policies 1 160 540 968 137 19,9 2 078 360
Headline earnings per
share in accordance
with previous
accounting policies 387,4 319,5 21,3 686,6
Basic earnings per
share in accordance
with previous
accounting policies 393,8 319,2 23,4 678,6
#This amount has been included for comparative purposes as the accounting policy
in respect of the straight-lining of leases was changed as at June 30 2005.
MESSAGE TO SHAREHOLDERS
OVERVIEW AND FINANCIAL SUMMARY
The Group produced pleasing results for the six months ended December 31 2005.
Headline earning per share increased by 21,8% with trading income increasing by
18,7%. The results were enhanced by a lower statutory tax rate and the benefits
of last year"s share buy-back. Strong operational performances were recorded by
most of the Group"s businesses. The Group achieved revenue growth of 21,6% to
R38,2 billion which included R2,2 billion from Deli XL which was consolidated
with effect from September 12 2005. The total benefit of this top line growth
was not fully achieved due to higher input costs of increasing capacity and the
higher fuel price. Trading margin decreased slightly from 4,5% to 4,4%
reflecting the impact of Deli XL and a change in the profit contribution mix of
the various businesses. Exchange rates were relatively stable and had a neutral
effect on the translation of the Group"s foreign businesses. The rand traded at
an average R11,56 against sterling, compared to R11,43 the previous period.
Cash generation from the underlying businesses remains strong, but seasonal
working capital requirements, increased capital expenditure and acquisitive
activity resulted in a net utilisation of funds. The Group"s balance sheet is
extremely strong with interest cover being approximately 11 times.
The financial results have been presented in conformity with IFRS accounting
standards, the effect of which has been a 5,2% reduction (16,8 cents per share)
to the comparative period headline earnings per share, reflecting for the most
part the cost of share-based payments as well as the amortisation of partially
reinstated intangible assets previously written off.
DELI XL
With effect from September 12 2005 Bidvest acquired 100% of Deli XL B.V., the
leading delivered foodservice wholesaler in the Benelux, from Koninklijke Ahold
N.V., for approximately R1,1 billion. Good progress has been made in bedding
down the acquisition and certain management changes have been effected. This
acquisition strengthens our foothold in the European foodservice market and we
are confident Deli XL will deliver on our expectations. The impact of this
acquisition will be more significant in the second half of the financial year as
the trading results for the full six months are brought to account.
HORECA TRADE
In September 2005, 3663 First for Foodservice acquired a controlling stake in
Horeca Trade, a small Dubai-based foodservice distributor which has the
potential to develop into one of the largest foodservice distributors in the
Middle East.
DARTLINE SHIPPING
In January 2006 Bidvest concluded the sale of its cross-channel ferry business,
Dartline Shipping, including the ferry terminal at Dartford, Kent, for GBP58,9
million (R650 million), resulting in a significant premium to book value. The
sale is consistent with the Group"s philosophy of exiting businesses which fail
to meet acceptable rates of return.
LITHOTECH FRANCE
Lithotech France continued to incur losses, despite concerted management efforts
to place the business on a sound financial footing. The Group is addressing this
situation and any losses incurred will be offset by the benefits arising from
the sale of the Dartline business.
CHANGES TO THE BOARD OF DIRECTORS
As advised in the 2005 annual report, the Group intends to restructure its
statutory board with as little impact as possible on interfering with the
Bidvest culture of decentralization and participative management styles. The
principal of such restructure will be to include the executives of the major
business activities on the board. Attention is also being given to
reconstructing the non-executive component. An announcement in this regard will
be made shortly.
DIVISIONAL REVIEW
SERVICES
BIDFREIGHT
Bidfreight southern Africa posted a pleasing result characterised by ongoing
rand strength and improved export volumes handled by the Terminals Division.
Trading income grew by 17,8% to R260,2 million on a 16,8% increase in revenue to
R7,7 billion.
Terminals" results were good. Trading income from Bulk Connections and Bulk
Terminals improved.Tank capacity utilisation improved at IVS but trading income
was slightly behind expectations after absorbing margin pressure. SACD produced
a strong result with trading income boosted by volume increases through the new
warehouse in Durban and the Intermodal business.
Safcor Panalpina, South Africa"s largest freight forwarder, performed well
despite a slight decline in margins. Additional facilities are due to come on
stream at Johannesburg International Airport, which should sustain growth in the
future.
Marine posted a satisfactory result, with the liner operations reporting
increased volumes and a greater number of port calls.
BIDCORP PLC
Dartline traded below expectations despite higher capacity utilisation and
greater efficiencies. A steady performance by Bidcorp"s Ontime Automotive
businesses was offset by poor results from the Volume Distribution businesses.
BIDSERV
Bidserv delivered an acceptable performance in a challenging trade environment,
characterised by margin pressure in certain businesses. Revenue grew 5,2% to
R1,5 billion, though trading income was up 11,3% to R144,3 million due to
management"s strong focus on cost containment.
Strong performances from Laundries and specialised cleaning group TMS were
offset by weaker performances in Magnum Shield and BidAir. Cleaning reported a
21,0% improvement in trading income, and succeeded in winning a number of large
contracts. Laundries posted a 27,0% increase in trading income and continues to
reap the benefits of its appropriately timed capital expenditure.
International Payment Systems, which provides a range of cash management systems
and EFT point of sale devices, traded well and order books are full. Magnum
Shield had a difficult trading period during which cost increases were not
sufficiently passed onto customers.
Greens performed below expectations and remedial steps have been taken. BidAir,
which provides a range of airport services, posted results in line with budget.
The Industrial and Janitorial Division, including G.Fox, performed
satisfactorily.
RENNIES FINANCIAL SERVICES
Renfin"s revenue was 8,9% higher at R367,9 million and trading income increased
by 15,4% to R74,9 million.
Since the introduction of fee-based income in 2005, the Travel businesses have
experienced static volumes, however, profitability improved by 55,6%. Average
ticket prices have remained flat over the period. As all suppliers move to zero
commission, the ability to leverage competitive advantage will improve.
Rennies Bank delivered a poor performance with trading income down 21,1%
impacted by the lower retail margins and higher sales of lower value products.
The strong and stable rand constrained dealing margins.
FOODSERVICE PRODUCTS
BIDVEST EUROPE
Results were boosted by the inclusion of Deli XL from September 2005. Revenue
was up 38,7% to R10,4 billion and trading income improved 19,9% to R286,3
million.
In the UK, 3663 increased trading income in sterling by 3,9%. Performance was
adversely affected by sluggish economic conditions and the impact of the July 7
terror bombings in London. Joint purchasing opportunities are being pursued with
Deli XL to lower purchasing costs and improve margins.
Sales in Multi Temperature, Frozen, Fresh and Chilled were in line with prior
year. Margin growth has been strong and reflects continued focus in this area.
The Barton Meat Company reported sales below expectations due to a shortfall in
new business. Contract Distribution traded well, benefiting from the take-on of
new contracts. The Ministry of Defence contract revenue was down as a result of
reduced military activity in Kuwait and Afghanistan.
Deli XL"s results were in line with expectations, notwithstanding management
changes following the acquisition. There are encouraging signs of sustained
growth in the European hospitality industry, and Deli XL is well positioned to
benefit from this. Opportunities for consolidation and market share gains are
being explored.
BIDVEST AUSTRALASIA
Bidvest Australasia traded well, growing revenue and trading income by 21,1% and
27,7% respectively. Bidvest Australia grew trading income 20,1%, increasing its
trading margin to 3,1% (2005: 2,8%). Foodservice grew trading income 16,8%.
Melbourne continued to operate profitably, but Sydney is still making a loss,
and steps have been taken to stimulate sales. Hospitality produced a
satisfactory performance and efforts are under way to expand the national
footprint of this business. The national roll-out of QSR has had a beneficial
effect on operating performance, increasing trading income fourfold. Crean First
for Foodservice New Zealand traded strongly, with trading income up 21,3%. These
results were achieved despite a slowing economy and deflationary pressures.
CATERPLUS
Caterplus achieved a modest 5,1% growth in trading income despite good top-line
growth. The trading environment was challenging where volume growth necessitated
capacity expansion. Catering Supplies and Frozen experienced margin squeeze as
revenue gains were offset by increases in overheads. Speciality traded very well
buoyed by niche foodstuffs and demand from the home entertaining sector.
Vulcan"s trading income was slightly down due to falling export volumes. Hotel
Amenities and Lufil both traded well.
COMBINED FOODS
Combined Foods results were disappointing, with trading income flat at R70,7
million. Bidbake was particularly affected by yeast imports, which impacted its
ability to pass on cost increases to customers. Crown National traded reasonably
well despite higher uncompetitive prices and the effects of Newcastle disease on
the poultry industry. The move to new facilities should present opportunities
for efficiency improvements.
COMMERCIAL PRODUCTS
OFFICE PRODUCTS
Revenue was up 9,7% to R1,8 billion, though trading income increased by 7,7% to
R115,9 million. Stationery traded under difficult conditions, where competitive
pressures and rand strength constrained margins negating revenue gains. Waltons
grew trading income 22,6% despite a poor result from the southern Gauteng
region. Kolok was impacted by the strong rand and capacity constraints in
Gauteng and Durban, although these bottlenecks have been addressed by the
opening of new distribution facilities. Furniture posted a 6,9% increase in
trading income in the face of strong import competition from China and Eastern
Europe. Automation traded well with Minolta growing trading income by 18,6%,
maintaining tight control over expenses and growing margins.
BIDPAPER PLUS
Revenue grew 10,3% to R1,1 billion and trading income was up 4,3% to R79,8
million despite tough trading conditions. Management"s unrelenting focus on
expenses, which fell 5,7%, assisted the profitability. Lithotech SA experienced
good growth in its Mail and Laser businesses, although this growth was offset by
the ongoing decline in volumes in its traditional business forms. Silveray
managed to increase volumes, but at lower prices due to competitive pressures.
Lithotech France continued to show losses despite a major restructuring of the
business.
BID INDUSTRIAL PRODUCTS
Revenue increased 18,4% to R1,8 billion while trading income was up 26,3% to
R120,2 million.
Electrical Wholesaling traded successfully on the back of a buoyant construction
sector with a 16,9% increase in revenue and a 57,2% growth in trading income,
despite a more than 38% increase in the price of copper over the past 6 months.
Revenue was flat for Afcom GE Hudson, whilst trading income was down 19,5%,
necessitating Afcom switching certain products from local manufacture to
imports. Buffalo Executape reported a 5,8% drop in trading income, but is
focussing on margin management and new business ventures into the DIY industry.
AUTOMOTIVE PRODUCTS
MCCARTHY
McCarthy"s achieved a 19,9% growth in revenue to R8,3 billion and a 28,6% rise
in trading income to R290,2 million. Notwithstanding the ongoing surge in new
vehicle sales, buttressed by low interest rates and strong consumer confidence,
new and used vehicle margins remained under pressure, impacting the franchise"s
trading performance. Budget Rent A Car achieved better asset utilisation and
volume growth. Yamaha Distributors performed well, despite an increasingly
competitive market, impacted by parallel and grey imports. Financial Services
delivered an outstanding performance, achieving greater market penetration with
insurance products. GAZ SA, the taxi distributorship, continues to make steady
progress.
CORPORATE SERVICES
Namsov, Bidvest"s 31%-owned Namibian fishing business, produced an excellent
turnaround, reporting trading income of R42,2 million due to reasonable catches
and improved selling prices. Bidvest Network Solutions was sold to Business
Connexion during August 2005, while mymarket.com continues to grow its customer
base.
PROSPECTS
The trading environments for many businesses in the Group are favourable.
Capacity expansion has taken place across the Group to cater for current and
future growth. Management has been up to the task of seizing opportunities when
they arise.
The reporting and management structures have been realigned to take better
advantage of the many synergies which exist in the Group.
The Group to date has had a reasonably strong and inflexible approach to
acquiring businesses where less than 100% of the equity was acquired. This
acquisition policy of total control is being relaxed in so far as new larger
scale activities where Bidvest will consider acquiring a significant
shareholding with management control. This revised policy will enable the Group
to take advantage of larger scale acquisition opportunities and utilise its
skills in extracting value out of the investment.
The Group is optimistic of continuing to achieve above average returns and
growth.
For and on behalf of the Board
MC Ramaphosa B Joffe Johannesburg
Chairman Chief Executive February 27 2006
DISTRIBUTION OUT OF SHARE PREMIUM
Shareholders" attention is drawn to the further announcement by Bidvest
regarding the distribution.
Notice is hereby given that an interim cash distribution out of share premium of
162,0 (2004: 133,8) cents per share, in lieu of a dividend, has been awarded to
members recorded in the register of the Company at the close of business on
Friday, March 24 2006.
Shareholders are advised that the last day to trade "cum" the distribution will
be Thursday, March 16 2006. The shares will trade "ex" the distribution as from
Friday, March 17 2006 and the record date will be Friday, March 24 2006. Share
certificates may not be rematerialised or dematerialised during the period
Friday, March 17 2006 to Friday, March 24 2006, both days inclusive. Payment
will be made on Monday, March 27 2006.
In terms of the requirements of the Companies Act, the directors confirm that
after the payment of the distribution, the Company will be able to pay its debts
as they become due in the ordinary course of business and its consolidated
assets, fairly valued, will exceed its consolidated liabilities.
MA David Johannesburg
Company secretary February 27 2006
THE BIDVEST GROUP LIMITED
("Bidvest" or "the Group" or "the Company")
Directors M C Ramaphosa (Chairman), B Joffe (Chief Executive), D D B Band, F J
Barnes*, B L Berson**, M C Berzack, L G Boyle*, L I Chimes, M Chipkin, A A da
Costa, M B N Dube, A M Griffith, L I Jacobs (alternate L J Mokoena), S Koseff, C
H Kretzmann, R M Kunene, G Marcus, D Masson, B E Moffat (alternate T Slabbert),
P Nyman, J L Pamensky, S G Pretorius, L P Ralphs, T H Reitman*, D K Rosevear, A
C Salomon (alternate H L Greenstein), C E Singer, P D Womersley *British
**Australian
Company Secretary M A David
Transfer Secretaries Ultra Registrars (Pty) Limited, 11 Diagonal Street,
Johannesburg, 2001 South Africa. PO Box 4844, Johannesburg, 2000 South Africa.
Registered Office Bidvest House, 18 Crescent Drive, Melrose Arch, Melrose,
Johannesburg, 2196 South Africa. PO Box 87274, Houghton, Johannesburg, 2041
South Africa.
Registration Number 1946/021180/06 ISIN ZAE000050449
Share Code BVT URL www.bidvest.com
Date: 27/02/2006 12:21:42 PM Produced by the JSE SENS Department
